ORIX CORP

Where It Passes

Where It Falls Short

• Profitability6% pass✓ 11✗ 24▾

  15 of 16 flag IX's profitability — Graham, Buffett, Lynch +12 more

  Net income / market capitalization+7.58%; #1078/6340 (top 17.0%)

  ✓AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Positive EPS (10 years)9/18 years positive

  ✗GrahamPositive EPS every year for 10 years

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Net Income Positive (10+ years)18/18 years positive

  ✓BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)9.1%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)13.7% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy

  ✗BuffettPositive and growing

  Earnings Variance (10-yr CoV)

  ✗BuffettCoV < 0.3

  Retained Earnings Effectiveness

  ✗Buffett$1 retained -> > $1 market value created

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  ROE10.0%

  ✗Lynch> 15%

  Net Income / Total Assets2.48%

  ✓PiotroskiROA > 0

  ROA Change YoY2.08% -> 2.48% (delta: +0.40%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=7.61%, ROA=2.48%

  ✓PiotroskiCFO/Assets > ROA

  Pre-Tax Income / Revenue20.8%

  ✓Dreman>= 8%

  Net Income / Shareholders' Equity10.0%

  ✗Dreman> 12%

  Return on Equity10.0%

  ✗Munger> 15%✗AkreROE > 20% (3-year avg)

  Margin of SafetyP/TBV=1.9x

  ✗PabraiP/TBV < 1.5 or P/E < 15

  ROE (high and growing)FY2023: ROE=8.8%; FY2024: ROE=8.6%; FY2025: ROE=10.0%

  ✗AkreLatest 3 consecutive FYs: ROE > 15% in each

  Discount to Intrinsic Value

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency18/18 years positive

  ✓MarksPositive net income in >= 7 of last 10 years

  Operating Income / Revenue13.7%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity10.0%

  ✗Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend12.8% (2023) -> 13.7% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendrevenue up, operating margin 12.8% -> 13.7%

  ✓SleepRevenue rising; gross margin flat or falling; operating margin holding

  ROE (5-year)0/5 years above 12% (latest 10.0%)

  ✗SleepROE > 12% in a majority of years

  Gross profit / total assets

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+9.98%; #1812/5226 (top 34.7%)

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0019; #196/5884 (top 3.3%)

  ✓AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Valuation8% pass✓ 6✗ 20▾

  11 of 12 flag IX's valuation — Graham, Lynch, Dreman +8 more

  Price / Book Value per Share1.3x

  ✓Templeton< 1.5x✗SchlossP/B <= 0.80x (app cutoff)

  Net income / market capitalization+7.58%; #1078/6340 (top 17.0%)

  ✓AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Price / 3-yr avg EPS

  ✗Graham<= 15x

  Price-to-Tangible-Book Ratio1.9x

  ✗Graham<= 1.5x

  P/E x P/TBV

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  Price / EPS

  ✗Dreman< 12x✗Templeton< 12x (fixed ceiling; proxy for the market's cheapest 40%)

  Price / (CFO / Shares)4.4x

  ✓Dreman< 8x

  Price / Tangible Book Value per Share1.9x

  ✗Dreman< 1.2x✗SchlossP/TBV <= 1.00x (app cutoff)

  Valuation ReasonablenessOE Yield=14.1%

  ✓MungerP/E < 25 or Owner Earnings Yield > 5%

  P/E or FCF Yield

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/B=1.3x

  ✓MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share

  ✗Ackman<= 25

  Price vs. Trailing Low171% of trailing low ($20.06)

  ✗Templeton<= 120% of trailing low (certified split-adjusted live window)

  Positive book equity / market capitalization+0.7598; #2035/6449 (top 31.6%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS

  ✗NeffP/E <= 15x (app proxy for a P/E 40%-60% below the market)

  (EPS CAGR % + Dividend Yield %) / P/E

  ✗Neff> 0.7 (Neff's published traditional edge)

  Book Value per Share Change+13.2%

  ✓SchlossLatest BVPS >= earliest BVPS over >= 3 years (app rule)

  Revenue / market capitalization+0.5646; #2463/5247 (top 46.9%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date-11.87%; #3537/6202 (top 57.0%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Growth13% pass✓ 2✗ 10▾

  7 of 8 flag IX's growth — Graham, Lynch, Dreman +4 more

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency18/18 years positive

  ✓MarksPositive net income in >= 7 of last 10 years

  3yr Median Revenue Growth3.4%

  ✗Ackman>= 5%

  Positive EPS Growth Frequency

  ✗AckmanPositive EPS growth in >= 3 of last 5 years

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trendrevenue up, operating margin 12.8% -> 13.7%

  ✓SleepRevenue rising; gross margin flat or falling; operating margin holding

  5-year Revenue CAGR0.1%

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Verdicts17% pass✓ 2✗ 10▾

  Split decision: 10 FAIL · 4 NEUTRAL · 1 BUY · 1 PASS

  Overall verdict

  ✗GrahamFAIL (2/7)✗BuffettFAIL (2/6)✗LynchFAIL (0/4)✓PiotroskiBUY (F-Score 7)✗DremanFAIL (3/9)•MungerNEUTRAL (2/3)✗PabraiFAIL (0/3)✗AkreFAIL (0/5)✗MarksFAIL (2/4)✗AckmanFAIL (2/8)•TempletonNEUTRAL (5/8)✓SleepPASS (3/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (2/6)✗SchlossFAIL (3/7)•OshaughnessyNEUTRAL (Not ranked)
• Cash Flow30% pass✓ 4✗ 8▾

  7 of 10 flag IX's cash flow — Buffett, Lynch, Pabrai +4 more

  Free Cash Flow Proxy

  ✗BuffettPositive and growing

  FCF Positive and Growing

  ✗LynchPositive and growing

  Operating Cash Flow$8.6B

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=7.61%, ROA=2.48%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)4.4x

  ✓Dreman< 8x

  P/E or FCF Yield

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive

  ✗MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap

  ✗Ackman>= 4%

  Price / FCF per Share

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency18/18 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures

  ✗Neff> $0 (app proxy for a strong fundamental case)

  (Operating cash flow - capex) / market capitalization

  ✗OshaughnessyTop 10% of eligible cross-section
• Efficiency33% pass✓ 1✗ 2▾

  2 of 3 flag IX's efficiency — Akre and Sleep

  Revenue / Total Assets Change YoY0.17x -> 0.19x

  ✓PiotroskiImproved YoY

  Reinvestment Rate x ROIC6.2% (RR=62% x ROIC=10.0%)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROE (5-year)0/5 years above 12% (latest 10.0%)

  ✗SleepROE > 12% in a majority of years
• Valuation models33% pass✓ 1✗ 2▾

  Models split on IX at $34.39 — fair values range $28.00–$37.79

  Pabrai fair value$32.96

  ✗Pabrai-4.3% margin vs $34.39

  Akre fair value$37.79

  ✓Akre+9.0% margin vs $34.39

  Marks fair value$28.00

  ✗Marks-22.8% margin vs $34.39
• Debt & Leverage50% pass✓ 3✗ 2▾

  2 of 4 pass — Asness and Schloss object

  LT Debt / Total Assets Change33.99% -> 33.14%

  ✓PiotroskiDecreased YoY

  Total Debt / Shareholders' Equity0.27

  ✓Templeton< 1.0 (fixed cap; proxy for below-sector-median leverage)✓SchlossD/E < 1.00x

  Negative debt-to-equity (higher means less debt)-0.2703; #1920/4210 (top 45.6%)

  ✗AsnessTop 30% of eligible cross-section

  Current Assets / Current Liabilities

  ✗SchlossCurrent ratio >= 1.50x (app cutoff)